Unanticipated Inflation Will Benefit Creditors at the Expense of Debtors

question 31

True/False

Unanticipated inflation will benefit creditors at the expense of debtors.

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Definitions:

Law of Increasing Opportunity Costs

states that as production of one good increases, the opportunity cost of producing an additional unit of this good also increases, due to factors of production not being perfectly interchangeable.

Satisfy Wants

The process of fulfilling the desires or needs of consumers through the provision of goods and services.

Marginal Cost Curve

A graphical representation that shows how the cost of producing one additional unit of a good changes as the quantity of production is increased.

Increasing Marginal Opportunity Costs

Represents the concept that each additional unit of a good or service produced requires the sacrifice of increasingly more valuable alternatives.